The dollar index (DXY00) on Thursday rose by +0.35%.  The dollar rose on Thursday as doubts about whether a ceasefire in Iran will materialize weighed heavily on stocks and boosted safe-haven demand for the dollar.  Also, Thursday’s decline in US weekly continuing unemployment claims to a 1.75-year low is a sign of a strong labor market that is hawkish on Fed policy and dollar-supportive.  In addition, Thursday’s +4% surge in crude oil prices pushed inflation expectations higher and may prompt the Fed to k ...

Economic Indicators - The dollar index rose by +0.22% on Wednesday, recovering from early losses after Iran rejected the latest US peace proposal, with US economic news indicating a significant increase in the February import price index ex-petroleum, which rose by +1.2% month-over-month, the largest increase in 4 years [1][3] - US MBA mortgage applications fell by -10.5% in the week ended March 20, with the mortgage purchase sub-index down -5.4% and the refinancing mortgage sub-index down -14.6%, while the average 30-year fixed-rate mortgage increased by +13 basis points to 6.43% from 6.30% the prior week [3] Interest Rate Outlook - Swaps markets are pricing in a 4% chance of a +25 basis point rate hike at the upcoming FOMC meeting on April 28-29, with expectations that the FOMC will cut interest rates by at least -25 basis points in 2026, contrasting with the BOJ and ECB, which are expected to raise rates by at least +25 basis points in the same year [4] - A 62% chance of a +25 basis point rate hike by the ECB is being discounted for the policy meeting on April 30 [6] Currency Movements - The EUR/USD fell by -0.38% on Wednesday, pressured by a decline in business confidence in Germany, as the German March IFO business climate index fell by -2.0 to a 13-month low of 86.4 [5]

The dollar index (DXY00) rallied to a 9.5-month high on Friday and finished up +0.65%.  The dollar rallied on Friday as the war in Iran shows no signs of easing, threatening to keep crude oil prices elevated and prompting the Fed to hold off on cutting interest rates.  Higher crude prices also threaten the European and Japanese economies that rely on energy imports, weakening their currencies against the dollar. Friday’s US economic news was mixed for the dollar after Jan personal spending, and the Unive ...

Economic Indicators - The US CPI report showed a monthly increase of +0.3% and a yearly increase of +2.4%, while the core CPI rose +0.2% m/m and +2.5% y/y, indicating inflation pressures remain above the Fed's target of +2% [2] - The headline CPI of +2.4% y/y is just 0.1 point above the 5-year low, while the core CPI matches the 5-year low [2] Oil Market Dynamics - WTI crude oil prices increased by about +4% today, reaching a 3.75-year high of $119.48 before falling back to around $86 per barrel [3] - The IEA proposed a significant 400 million-barrel release by G-7 nations to address oil supply disruptions, which is larger than the previous release of 182 million barrels in 2022 [3] Interest Rate Outlook - Swaps markets are pricing in a 4% chance of a -25 bp rate cut at the next FOMC meeting, with expectations for further cuts in 2026 [4] - The dollar is facing downward pressure due to a poor outlook for interest rate differentials, as the FOMC is expected to cut rates while other central banks are anticipated to raise rates [4] Currency Impact - The EUR/USD pair is down -0.19% due to dollar strength, which is further impacted by the rise in WTI crude oil prices, negatively affecting the Eurozone economy [5]

Group 1: Currency and Economic Indicators - The dollar index (DXY00) experienced downward pressure due to a nearly -12% drop in oil prices, which is seen as dovish for Federal Reserve policy, but found some support from a +5.6 basis point increase in the 10-year T-note yield [1] - February existing home sales in the US rose by +1.7% month-over-month to 4.09 million, surpassing expectations of a decline to 3.88 million, which was supportive of the dollar [2] Group 2: Oil Market Dynamics - April WTI crude oil futures prices fell by nearly -12%, reversing part of the previous rally, with prices dropping to around $83 per barrel after reaching a high of $119 per barrel due to geopolitical tensions [4] - The geopolitical situation remains tense as Iran appointed a hardliner as the new supreme leader, indicating a continuation of its assertive stance despite military actions from Israel and the US [4] Group 3: Interest Rate Expectations - Swaps markets are currently pricing in a 0% probability for a -25 basis point rate cut at the upcoming FOMC policy meeting on March 17-18, reflecting a poor outlook for interest rate differentials [5] - The Federal Open Market Committee (FOMC) is expected to cut interest rates by at least -25 basis points in 2026, while the Bank of Japan (BOJ) and European Central Bank (ECB) are anticipated to raise rates by at least +25 basis points in the same year [5]

Group 1: Dollar Index and Economic Indicators - The dollar index (DXY00) is up +0.27%, supported by rising oil prices nearing $100 per barrel, which is favorable for Fed policy and the US dollar as the largest oil producer [1] - Recent weak US economic data, including a decline of -92,000 in February payrolls and a -0.2% month-over-month decline in January retail sales, is putting downward pressure on the dollar [2] - The outlook for interest rate differentials is poor, with expectations of a -25 basis point cut by the FOMC in 2026, while the BOJ and ECB are anticipated to raise rates by at least +25 basis points in the same year [3] Group 2: Currency Movements - The euro (EUR/USD) is down -0.45% due to the strength of the dollar and the negative impact of rising oil prices on the Eurozone economy, which relies heavily on oil imports [3] - The yen (USD/JPY) is up +0.39%, experiencing weakness from the upward spike in oil prices, which negatively affects Japan's economy due to its dependence on imported energy [4] Group 3: Precious Metals Market - Gold prices are lower amid long liquidation and a stronger dollar, with rising oil prices increasing pressure on geopolitical tensions, particularly regarding the US-Iran conflict [5] - Despite lower prices, precious metals are supported by safe-haven demand due to concerns over the prolonged US and Israeli conflict with Iran, especially following the appointment of a hardliner as Iran's new supreme leader [6] - Strong central bank demand for gold is evident, with China's PBOC increasing its gold reserves by +40,000 ounces to 74.19 million troy ounces in January, marking the fifteenth consecutive month of increases [7]

Economic Indicators - The US December S&P composite-20 home price index increased by +0.47% month-over-month and +1.38% year-over-year, surpassing expectations of +0.30% month-over-month and +1.30% year-over-year [3] - The Conference Board's US February consumer confidence index rose by +2.2 to 91.2, exceeding expectations of 87.1 [3] - The US February Richmond Fed manufacturing survey of current conditions unexpectedly declined by -4 to -10, which was weaker than the anticipated increase to -5 [3] Currency Movements - The dollar index (DXY00) is up by +0.23%, supported by a weaker yen that fell to a 2-week low against the dollar [1] - The yuan strengthened to a 2.75-year high against the dollar, limiting gains in the dollar [2] - The euro (EUR/USD) is down by -0.14% due to a stronger dollar and negative economic news from the Eurozone [6] Central Bank Outlook - Chicago Fed President Austan Goolsbee expressed optimism for potential rate cuts this year, contingent on progress in inflation towards the 2% target [4] - The swaps market is pricing in a 3% chance of a -25 basis point rate cut at the next FOMC meeting on March 17-18 [4] - Expectations indicate a -50 basis point rate cut by the FOMC in 2026, while the Bank of Japan is anticipated to raise rates by +25 basis points in the same year [5] Eurozone Economic Performance - Eurozone January new car registrations fell by -3.9% year-over-year to 800,000, marking the largest decline in seven months [7] - The swaps market is discounting a 2% chance of a -25 basis point rate cut by the ECB at its next policy meeting on March 19 [7]

Core Insights - The SPDR Portfolio Emerging Markets ETF (SPEM) has achieved a 32% gain over the past year, significantly outperforming the S&P 500's 16% return, driven by growth in emerging market economies, particularly in Asia and Latin America [2][7] Performance Overview - SPEM provides diversified access to emerging markets with an expense ratio of just 0.07%, tracking over 800 holdings across countries like China, India, and Brazil [3] - Notable individual stock performances include Nu Holdings, which rose 28% with 41% earnings growth, while PDD Holdings fell 8% due to a focus on market share over profitability [7] Currency Impact - Currency movements, particularly the strength of the U.S. dollar, significantly influence emerging market returns; a weaker dollar enhances the value of local currency-denominated assets [4] - Monitoring the DXY Dollar Index is crucial, as a sustained move below 100 could support emerging market strength, while a rise above 108 may create challenges [5] Volatility Factors - Individual stock performance within SPEM can vary widely; for instance, PDD Holdings' decline illustrates the trade-offs between growth and profitability that many emerging market companies face [6]

Group 1: Dollar Index and Labor Market - The dollar index rose to a 1.5-week high, finishing up by +0.23%, driven by a stock selloff that increased liquidity demand for the dollar [1] - Challenger's January job cuts rose by +117.8% year-over-year to 108,435, marking the largest amount of job cuts for a January since 2009 [2] - Weekly initial unemployment claims increased by +22,000 to an 8-week high of 231,000, indicating a weaker labor market than the expected 212,000 [2] Group 2: Federal Reserve and Interest Rates - Fed Governor Lisa Cook's hawkish comments suggested risks are tilted toward higher inflation, supporting the dollar despite signs of labor market weakness [1] - The FOMC is expected to cut interest rates by about -50 basis points in 2026, while the Bank of Japan (BOJ) is anticipated to raise rates by +25 basis points in the same year [4] - Swaps markets are pricing in a 23% chance of a -25 basis point rate cut at the next policy meeting on March 17-18 [3] Group 3: Eurozone Economic Indicators - The euro fell by -0.14% as it gave up an early advance due to a stronger dollar, despite the ECB keeping interest rates unchanged [5] - Eurozone December retail sales fell more than expected, while German December factory orders unexpectedly rose, presenting mixed economic signals for the euro [5]

Core Insights - The dollar index (DXY00) reached a 1.5-week high, increasing by +0.12%, driven by a stock selloff that heightened liquidity demand for the dollar and hawkish comments from Fed Governor Lisa Cook regarding inflation risks [1] - The dollar experienced a decline due to signs of weakness in the US labor market, with significant job cuts and rising unemployment claims indicating a potential dovish shift in Fed policy [1][2] Labor Market Indicators - Challenger's January job cuts surged by +117.8% year-over-year to 108,435, marking the highest number of job cuts for January since 2009 [2] - Weekly initial unemployment claims rose by +22,000 to an 8-week high of 231,000, surpassing expectations of 212,000, indicating a weaker labor market [2] - December JOLTS job openings unexpectedly fell by -386,000 to a 5.25-year low of 6.542 million, contrary to expectations of an increase to 7.250 million [2] Dollar Performance and Market Sentiment - The dollar hit a 4-year low following President Trump's comments on its weakness, compounded by capital outflows from foreign investors due to a growing budget deficit and political polarization [3] - Market expectations indicate a 19% probability of a -25 basis point rate cut at the upcoming policy meeting on March 17-18 [3] - The dollar is anticipated to remain under pressure as the FOMC is expected to cut interest rates by approximately -50 basis points in 2026, contrasting with expected rate hikes from the BOJ and unchanged rates from the ECB [4] Eurozone Economic Indicators - The EUR/USD pair decreased by -0.03%, with the euro slightly lower due to a stronger dollar, despite initial gains following the ECB's decision to keep interest rates unchanged [5] - Eurozone December retail sales fell more than expected, while German December factory orders unexpectedly increased, presenting mixed economic signals for the euro [5]